Few Surprises in April 2012 Supply/Demand Report

The key points in Tuesday morning’s USDA monthly supply/demand update were the lack of adjustment to U.S. corn ending stocks and a slightly larger reduction in South American soybean production than the trade expected.

Pre-report trade estimates for the 2011-12 U.S. corn carryout averaged 717 million bushels (range 626-801 million). USDA left its estimate at 801 million. As was the case last year, the March 1 stocks report implied a reduction might be coming but it did not materialize in this report. USDA left all usage categories unchanged, despite Energy Information Administration data indicating that daily ethanol production fell considerably in January and February (and the same likely continued in March) and exports that are lagging the pace needed to make the projected 1.7 million bushels. The expected national average cash price was narrowed by 10¢ on each end to $6-6.40/bu.

Pre-report estimates of Brazilian soybean production from 13 analysts surveyed by Dow Jones Newswires averaged 67 million tons; USDA trimmed its estimate below that range, to 66 mmt. This morning, Brazil’s CONAB came out with and even lower 65.6 mmt. Estimates for Argentine production averaged 45.3 mmt; USDA trimmed it to 45 mmt.

USDA’s 2011 soybean stocks projection was reduced 25 million bushels, to 250 million bushels. That compares with an average pre-report expectation of 246 million (range 225-275 million). USDA raised its estimated soybean price to $12-12.50/bu., compared with $11.40-12.60 last month.

USDA’s wheat ending stocks number, at 793 million, was slightly lower than the average trade guess of 796 million bushels but within the range of 740-825 million. The projected season average farm price was narrowed 5¢ on both ends to $7.20-7.40.

All-in-all the report was pretty close to what the trade was expecting.